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has been hovering around the $3,600 mark for the past three days, but it’s worth noting that ETH has surged by 58.8% since February. While some traders attribute the current resistance to uncertainty surrounding the approval of a spot Ether exchange-traded fund (ETF) in the U.S., others see the surge in Ether futures open interest as a sign of strong institutional demand.
The decision on a potential Ether spot ETF in May holds significant weight for Ether’s future price trajectory. The recent indictment by the United States Justice Department against the cryptocurrency exchange KuCoin has sparked debates about its implications. While some view it as a negative development due to the potential for tighter regulations, others argue that it could actually pave the way for a spot Ether ETF approval by May 25, the deadline for the U.S. Securities and Exchange Commission (SEC) to make its final decision.
A complaint filed by the U.S. Commodity Futures Trading Commission (CFTC) on March 26 against KuCoin for illegal trading activities categorized Bitcoin (BTC), Ether, and Litecoin (LTC) as “digital assets that are commodities,” placing them under the CFTC’s jurisdiction. This stance appears to challenge the SEC’s classification of Ether as a security.
BlackRock CEO Larry Fink stated in a recent interview on FOX Business that listing an Ether ETF could still be feasible even if the asset is considered a security by regulators. However, Bloomberg senior ETF analyst James Seyffart predicts a denial in May, highlighting the CFTC’s recognition of Ether as a commodity since at least February 2021.
While the growth of the Ether futures market, particularly in the regulated Chicago Mercantile Exchange (CME), is a positive development, the recent surge in aggregate Ether futures open interest should be analyzed cautiously. Although institutional interest is evident, attributing the surge solely to institutional investors oversimplifies the situation.
Binance leads in ETH futures market positions with $4.55 billion, followed by Bybit at $2.4 billion, while the open interest in CME Ether futures stands at $1.3 billion. Therefore, it’s essential to consider multiple factors beyond institutional investor interest.
Recent data shows an increase in demand for leveraged long positions in ETH futures, with the current funding rate at 0.04%, or approximately 0.8% weekly. While this indicates moderate bullish sentiment, rates above 1.2% per week may signal excessive optimism.
Examining data from the Ether options market provides further insights into professional traders’ sentiment. The 25% delta skew, which compares the pricing of call and put options, currently suggests a neutral market stance. However, compared to previous data, traders appear less optimistic about Ether’s potential to surpass the $3,800 mark.
